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Wednesday, April 23, 2008

Lithuania wants Ignalina open, fears the Bear

Lithuania has made a last-ditch effort to extend the life of its only nuclear power plant, fearing that its closure would boost energy costs and increase the Baltic country’s reliance on its former master, Russia. The Soviet-era Ignalina nuclear power plant’s remaining reactor is due to be shut down at the end of next year, an undertaking Lithuania made when it joined the EU in 2004. Lithuania hopes to persuade the EU to extend the life of Ignalina through a national referendum. Community organisations and political parties are set to begin collecting the 300,000 signatures needed to hold the fall referendum to delay the closing of plant. Ferran Tarradellas Espuny, spokesman for EU Energy Commissioner Andris Piebalgs, told New Europe that extending the life of the plant “is out of the question.” The chances of that happening are zero, zip, zilch, nada! He explained that closing down the nuclear plant is a primary goal included in the accession agreement ratified by the Lithuanian government, the parliament and citizens in a referendum. It was also ratified by the 27 member states. “It is not something that can be reopened. There is nothing they can do. It’s the law and you cannot break the law,” the EU energy spokesman said. “This exercise is basically a useless exercise.” That’s bad news for Lithuania, which depends on the reactor for about 75 percent of its electricity and will have to rely on Russian energy imports. The gas supply standoff between Russia and Ukraine is only a small taste of what’s in store for Lithuania, given its poor relations with Moscow. “They basically wouldn’t want to become more reliant on Russian energy, given the relations between the two countries are at a low point, that’s for sure,” Chris Weafer, chief strategist for Moscow’s UralSib investment bank, told New Europe. By closing down the nuclear plant, the balance of electricity for Lithuania would become more dependent on other sources of energy. If relations between Vilnius and Moscow were good, it would have been better for Lithuania to import more energy from Russia because that’s where the infrastructure is, and it would be cheaper. But, given the political situation, the Baltic state is more likely to look for other energy suppliers by bringing oil by ship and looking to import electricity from its western neighbours rather than its eastern neighbours. This means Lithuania will be looking at substantially increasing costs. “They would have to buy more energy from the West and that would increase their cost,” Weafer said. It’s a question of energy security. It’s better to have your own rather than rely on others, especially if that’s Russia, which may leverage energy supplies to advance its political goals. Analysts expect Dmitry Medvedev, as the new president of Russia, to work towards improving relations between Russia and European countries and former Soviet countries. But as Weafer pointed out, “the relationship with Lithuania would be the hardest to repair.” When supplies through a branch of the Druzhba I pipeline to Lithuania’s Mazeikiu oil refinery were halted almost two years ago, just weeks after Polish oil group PKN Orlen sealed a deal to buy the Mazeikiu complex, everybody assumed that was payback for Russian companies being blocked from buying the Baltic oil facility. But the EU energy spokesman said that was not the case. “Certainly the timing was awful because it was when PK Orlen bought Mazeikiu Nafta. If there was no supplier at all, then it could be seen as an attempt, but this is not the case. Oil continues to be shipped to the refinery,” he said, adding that Lithuania’s only oil refining facility is receiving oil by ship from the Baltic Sea. However, the pipeline is still not working. Tarradellas Espuny said the Commission has repeatedly asked Russia to reopen the oil pipeline to Lithuania. But he said Russia has a case. “If you look at it a bit coldly they seem to have a point because, at the end of the day, they are the ones that are losing money because they are not getting the transit money from the pipeline,” he said. Russia may not want to repair the pipeline. “It’s consistent with the policy they are following. They do not want to have intermediaries. They have to go through Belarus and they do not want to go through Belarus and that is the situation,” the EU energy spokesman said. “We don’t see anything worrying.”

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